Title of the thesis:

"Irreversibility, uncertainty and inaction of firms and individuals "

Time and place for the defense

4 May 2015 at 12:15 in the Kristian Gerhard Jebsen Centre, NHH

Prescribed topic for the trial lecture:

"Uncertainty, Irreversibility and Aggregate Dynamics"

Time of the trial lecture:

10:15 Kristian GerhardJebsen Centre, NHH.

The trial lecture and thesis defense will be open to the public.

The combination of irreversible choices and uncertainty about future outcomes creates incentives for economic agents to postpone their decisions. When decision makers abstain from making adjustments, it may result in relatively long periods of inaction. Such inaction spells are commonly observed among both firms and individuals.

Two of the papers in this thesis study partly irreversible decisions made by firms. Observed patterns of action and inaction among Norwegian manufacturing firms are used to estimate the size of costs related to three types of decisions:
(i) investments in production capital
(ii) adjustments to the size of the labor stock and
(iii) resetting prices of produced goods.

Estimation results show that adjustment costs are important for the timing of adjustments, especially costs related to capital and price adjustment decisions. Furthermore, the interrelated nature of capital and labor adjustment decisions provides incentives for firms to adjust capital and labor input levels simultaneously rather than sequentially.

The third paper studies fertility decisions among individuals. How is a completely irreversible decision about future childbearing affected by the occurrence of childbirths among our friends? The decision to start a family and the choice of timing for doing so is important for professional career paths, especially for women. Furthermore, the consequences of childbearing may be considered uncertain by potential mothers and fathers. In this context, social networks may both be important for information sharing and have a strong normative influence. Based on observed fertility among Swedish co-workers, the results presented in this thesis shows that co-workers may have a significant impact on each other's family planning.

Members of the evaluation committee

Chair: Professor Gernot Doppelhofer, NHH Norwegian School of Economics
Professor Christian Bayer, University of Bonn
Professor Fabien Postel-Vinay, University College London

Professor Øivind Anti Nilsen NHH, principal supervisor

Copies of the thesis will be available from: bib@nhh.no



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